The South Indian Bank Limited (SOUTHBANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to South Indian Bank's Q1 FY '22 Post Results Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Divya Purohit from ICICI Securities. Thank you, and over to you, ma'am.

Thank you, Neeraj. It is a pleasure to welcome you all to South Indian Bank's Q1 FY '22 Results Call. The management team is being led by Mr. Murali Ramakrishnan, Managing Director and CEO. Welcome and over to you, sir.

Thank you. Very good morning to all of you, and thank you for joining us for the South Indian Bank Q1 FY '22 Earnings Conference Call. We are joined by my colleagues, Mr. Thomas Joseph, Executive Vice President and Group Business Head -- Sales; Mr. Doraivel S., Chief Credit Officer; Mr. Leelanand, Head Treasury; and Mrs. Chithra, CFO. We hope that you and your family are safe and healthy. We continue to appreciate the efforts of our employees who have shown strong resilience in the ability to adapt to changing circumstances. Vaccination of our employees, the banks, has tied up the hospitals and also then vaccination camps in our offices across the country. We are hoping to get most of the employees fully vaccinated by September '21. Coming to the macroeconomic factor, the Indian economy had started showing signs of growth in the third quarter of FY '21, following ease of -- easing of COVID restrictions and resumption of business activities. The economic activity was leading back to pre-lockdown in the third quarter of FY '21. We were witnessing improvement in business activities till March '21, which was halted by the second wave of COVID infection across the country. There were subdued business activities during the month of April and May '21, following the lockdowns in various parts of the country. However, compared to the first wave, many states are still under lockdown or partial lockdown, which has been affecting the economic activities, particularly retail and MSME sectors like construction, tourism, hospitality, food processing, education institutes and few others. Following the second wave, most of the economic institutional bodies and rating agencies have reduced the GDP forecast for FY '22. We are keeping close watch on COVID-19 developments, which continue to be highly uncertain, including any information concerning the new variant of COVID virus. Further, we are closely assessing the impact of second wave on our borrowers. And wherever we feel there is genuine need, we're extending full support with restructuring. We are hoping for a meaningful recovery in business activities in the second half of financial year '22. We'll give you a quick update on our 6 key strategies. On capital, following the COVID uncertainty, the bank intended to beef up capital and endeavored to raise second tranche of capital by September 1. This is towards the second tranche of equity of INR 510 crores out of total INR 750 crores, which we had announced earlier. CASA, the overall CASA amount have crossed INR 25,000 crores, further CASA ratio has crossed 30% for the first time. Cost-income ratio, the bank continues to improve its noninterest income and curtailed operating expenses, which has led to improvement in cost-income ratio to 48.5%. Competency building. The bank has taken many initiatives in the area of function and soft skill development across the various levels of employees. We've also launched learning and development as a separate division under HR. We're also investing in a new LMS platform to facilitate training across the entire distribution network of the bank. Customer focus, the bank continues to leverage its digital capabilities to provide ease and convenience to its loyal customer base. Our share of digital transactions have been constantly growing and has crossed 92% levels for the first quarter. Compliance, this is given utmost importance and all the products and processes are mandatory looked through the framework of regulation to ensure total compliance. As far as our credit strategy is concerned, on corporate side, we are turning the portfolio with better rated corporates. Almost all the new additions to corporate book have carried the rating of A and above. On business loans, we are following conservative lending approach given the impact of COVID pandemic on MSME and SME sectors. On retail side, we have completed the revamping of the structure to facilitate sourcing from market proactively through vertical asset sectors, tweaking of credit process to ensure better underwriting, appropriate pricing to risk and a decision structure to ensure faster turnaround time. We believe that when the market becomes a bit conducive for quality credit, we'll be well poised to exploit the opportunity. In the meanwhile, we are leveraging our existing customer database to come up with pre-approved offers for personal loans and vehicle loan products. Gold loan is 1 segment where we are quite positive and are leveraging all opportunities to grow this portfolio in the balance trade. On liability side, we continue to see robust growth in retail term deposits and low-cost CASA deposit. The contribution of NR deposits continued to improve during the quarter. We expect the challenges of the second wave of COVID will continue during first half of the financial year '22. However, with the easing of restrictions and anticipated limited impact of third wave, if any, we hope and expect to have a reasonable uptick in our credit growth in second half of the financial year. Let me take you through the key highlights of the operational and financial performance for this quarter. The total business for the bank stands at INR 1,410,153 crores as at June 30, 2021. Advances declined to INR 58,319 crores, mainly due to limited credit opportunities following second COVID wave in the months of April and May. We have continued to grow our gold loan portfolio registering growth of 15% year-on-year to INR 9,364 crores as at June 30, 2021. The share of large corporate loans has been continuously declining from 27% in FY '15 to 5% in FY '21, in line with our stated strategy of calibrating corporate exposure and building granular book. Retail deposits rose by 10% year-on-year to INR 79,975 crores. CASA deposits increased by 16% year-on-year to INR 25,725 crores, predominantly due to continued improvement in our savings account business, which grew by 18% year-on-year to INR 21,551 crores. CASA ratio continued to improve and reached 30.4% of the total deposits. Bulk deposits declined by 52% year-on-year in line with our strategy. NRI deposit, which has been growing steadily rose by 8% year-on-year to INR 26,664 crores and contributes about 31.5% of our total deposits. Low-cost NRI deposits grew by 10.5% year-on-year to INR 8,275 crores. The bank saw a robust growth of 32% year-on-year in our NRI remittance business during the quarter. Our investment book was at INR 21,333 crores, of which HTM category contributed to INR 15,466 crores, while AFS contributed to INR 5,852 crores. During the quarter, due to unexpected second COVID wave, the bank witnessed higher slippages of INR 879 crores. Most of the slippages happened due to severe impact on personal and business loans. Overall, the bank had restructured INR 691 crores worth of loans during the quarter. The bank has restructured loans of INR 548 crores under COVID OTR 1 and INR 71 crores under OTR 2 framework during the quarter. Following the second COVID wave, we saw a dip in the collection efficiency for the month of April and May '21. However, with unlocking and lifting of the restrictions, this ratio started to improve from June onwards. The overall collection efficiency for the month of April, May, June, was 96.6%, 89.8% and 85.1%, respectively. The ratio takes into account the collections done till July 15, 2021. Gross NPA ratio was 8.02% as at June 30, 2021. During the quarter, the bank was able to recover or upgrade INR 349 crores worth of NPAs. 2 specific corporate accounts with exposure of INR 207 crores which slipped into NPA in Q4 2021 is now -- has now been restructured and upgraded during the quarter. The net NPA ratio was 5.05% as at June 30, 2021. Net interest income for the quarter was INR 542 crores. Net interest margin was 2.55% for Q1 '22 compared to 2.61% for Q4 '21. The decline in the margin was predominantly due to a decrease in yield on investments and reversal of interest on account of NPA slippages. Noninterest income increased by 59% year-on-year to INR 453 crores. This was mainly due to increase in treasury and ForEx income to INR 251 crores, registering 72% year-on-year growth; and other income of INR 110 crores, registering growth of 83% year-on-year and core free income -- fee income of INR 92 crores, which has increased by 16% year-on-year. PPoP for the quarter increased by 27% year-on-year to INR 512 crores as against INR 404 crores for Q1 FY '21. This was the highest Q1 PPoP in the history of the bank. As far as profitability is concerned, the company reported net profit of INR 10 crores for Q1 FY '22. The cost-income ratio for Q1 '22 improved to 48.5% compared to 53.7% for Q1 '21. Overall provisions increased by 70% year-on-year to INR 498 crores in Q1 FY '22. These provisions included INR 430 crores towards NPA and NPI and a standard asset provisions of INR 56 crores. The provision coverage ratio stood at 60.1% at June '21 as against 58.7% in March '21. PCR, excluding write-offs, improved to 39% as at June 30, '21 compared to 34% as at March 31, 2021. Our overall capital adequacy ratio improved to 15.5% as at June 30, 2021, compared to 13.5% as at June 30, 2020. While the Tier 1 ratio stands at 12.8% as at June 30, 2021, compared to 10.8% in the previous year of June 30. We believe that our strong and diversified franchise, large distribution network, structural changes to bring about growth, interest of talent and technology capabilities with improved tools will provide us the ability to leverage opportunities for profitable growth in the coming quarters with the headwinds in the economy tapering. With this, we open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of Sanjiv Agrawal from -- an individual Investor.

I have a couple of questions. Murali, in one of the media interviews towards the end of May, you indicated that the bank plans to increase the loan book about INR 10,000 crores. And that we expect...

Sorry, your voice is not clear at all. Sorry for that. Your voice is not clear at all.

Is it better now?

Yes, better. Slightly better.

Can you speak a little louder?

Yes.

Yes. In one of the media interviews towards the end of the May, Murali, you indicated that the bank plans to increase the loan book by about INR 10,000 crores this year. And that you expect slippages to be between 3.3% and 3.4%. Given the first quarter results and experience in the COVID second wave, do you still expect that guidance to hold, assuming there's no severe third wave?

Yes. Good question. Yes, you're right. Because when we were coming up with results for the March ended, that time the COVID 2 impact wasn't -- it did started and none of us could feel the intensity of COVID 2, and how it would actually affect the retail and MSME sectors in particular. So definitely, that INR 10,000 crores definitely looks tall order given the fact that almost April, May is a complete washout and June, we have just started seeing some revival. And I believe that with the multiple lockdowns happening even as we are talking across various states, the opportunity for new good quality assets continues to be very scarce. I'm sure you must have also read the fact that COVID has actually affected the SME in a very, very significant way, and almost 70%, 80% of the SMEs have registered losses for the last year. So given that, I certainly would like to chased the number which I had communicated, but we will take it as it comes. Because as I'm talking to, we are still uncertain about how much of impact it will have on the second quarter. And if COVID 3 happens, of course, the consensus is that the COVID 3 impact will be far lower. But then nobody really knows because the new variants, et cetera, seem to be very -- behaving very differently from whatever we could envisage. So -- but if H2 is supportive, then we would definitely work for reaching the kind of numbers which you talked about. But my own estimate would be, even if we end up doing, let's say, INR 5,000 crores, INR 6,000 crores of addition to our portfolio, I think we should consider ourselves lucky because of the fact that good quality assets are not available, and also the impact of this COVID on the retail and SME, which is the growth area that we wanted to actually focus on. We'll definitely be suffering due to these impacts. So I would certainly feel that INR 10,000 crores definitely looks a much taller order now. But our aim and endeavor is to beef up the advance -- beef up the total loan book with the quality assets. The criteria being quality. And definitely subject to quality being there, we'll aim to see as much addition which we can do in the coming quarters.

Okay. And any thoughts on the expected slippages in FY '22?

We expect it to be anywhere between 2.5% to 2.7% is what we have envisaged.

Okay. That's interesting. And just one last question. With regards to the new book that you're building, the more granular book, what steady state credit costs would you model in your projection? And overall portfolio level credit cost for FY '22, if you could give some guidance?

Actually, the new book, which we have started building especially in the area of corporate, et cetera, we are looking at adding only A-rated and above. Most of the additions which we have done are A-rated and above. As far as retail and SME growth is concerned, we have just completed the restructuring of the business set up. So we have created the verticals and the team has just started taking positions, and we have started using our existing database to come out with preapproved offers, et cetera. Definitely in unsecured loan, we'll be aiming to work anywhere between 2% to 2.5% kind of delinquency. As far as SME is concerned, given the fact that the market is terrible, I think 1% to 1.5% is what we should be aiming to work within. In a normal situation, I would have preferred to have a delinquency of 90-plus of less than 1%. But given that the market is very, very uncertain, I think 1.5% is what probably we can aim to. Our quality credit should ensure that we should not go beyond that as per my estimate.

And any thoughts on loss given default -- delinquencies? What's the credit cost?

Loss given default, as you know, is completely dependent on the secondary market available for property sale, et cetera. In fact, it had a huge impact in the last year as well as -- as we are witnessing. So anywhere from -- I mean, what we are seeing is that the trend continues to hold, wherever it's a residential property or a commercial property, the loss given default is definitely much lower than an industrial property or land or any of those. So we would be guessing that -- see, we haven't done too many -- because not too many sales are anyway happening in terms of secondary sales of the properties, et cetera. But wherever we have done, we are seeing LGDs of 50% -- 45% to 50% on an average.

The next question is from the line of Prabal Gandhi from Antique Stockbroking.

Am I audible, sir?

Yes, yes, yes.

So just a clarification first. Also in this particular quarter, we restructured INR 207 crores of corporate NPA and which were also upgraded. Is that right?

Yes.

Okay. A question on the corporate side, in FY '21, we saw slippage rate of 5%. And this quarter also, we had a slippage of around 1%. And if I also exclude these restructuring fees, then the restructuring was around 3%. So the 4% stress was still there. So when are we expecting normalization in these steres level on the corporate side?

Corporate side, frankly, if you ask me, I think the impact of -- if you look at the slippages happened in this quarter, for example, out of INR 879 crores, which had a slippage this quarter, corporate is only INR 168. So the overall impact of slippages, now we are witnessing more in business loan and retail. And given the fact that our corporate book -- overall book size is also only INR 14,227 crores, which is actually lower than even a personal segment as well as a business segment book size. So -- and what we are witnessing is more and more of contribution of slippages happening from business loans and personal segment. So I'm not too much worried about slippages happening from corporate. Of course, there are few corporate accounts where -- which are still worrying. But relatively, the worry seems to be more on business loans and personal segment.

Okay. And sir, would you like to share the corporate NPA levels and the PCR that we are holding on the book?

You're asking about how much is the corporate NPA alone?

Correct. Correct, sir.

Yes. One second. Just hold on. Just give me a minute, I'm just taking it out.

No worries. Go on, sir.

Yes. Overall, the corporate book, as we said, is about INR 14,227 crores in my current advances book of INR 58,319 crores, of which currently, we are carrying an NPA of 15 -- INR 1,505 crores is the NPA which we have.

And sir, and the corresponding provisions that we have on the corporate side?

Overall, that I wouldn't be able to immediately take it out. But what I can tell you is that overall, as you know, the provision coverage ratio, as I mentioned, it is about 60%. PCR has been improved from 58% to 60%. And even excluding write-off, it's about 38% now. Overall, if I say the entire book.

So sir, this is typically 10% to 11% of the NPA level. So -- and on the overall level, we are at 8%. So I'm assuming MSME NPAs are also on an elevated 6% to 8% around.

Correct. Correct. That is exactly -- that was my earlier point also. What we are seeing is that -- even in the delta, if you look at for the quarter, INR 879 crores, the MSME business segment has contributed INR 420 crores. Almost half of that is coming from MSME.

Understood, sir. Sir, on the interest side, so the investment yields show a fast decline this quarter. So any reasons behind that?

So it is basically due to the -- I mean, I'm sure -- Leelanand do you want to answer that? Leelanand is Treasury Head also. Yes, please.

Yes. Am I audible sir?

Yes, you are.

Yes. See, basically, we have taken a view that interest rates are likely to go up only. So we have sold off some of the securities, the longer term. So we have -- overall, we have reduced our duration, expecting that interest rates are given the inflation and all, we are expecting interest rates will likely to go up and which is also started showing also. Even if you see the 10-year GCI kind of moved from 6% levels in April, currently trading at 6.20% levels. So in first beginning of the year itself, we have taken that call. So we have reduced our duration considerably. So that our impact going forward will be very, very limited. So that has resulted in the interest income coming down marginally.

And sir, there is an indication...

Long duration one with the short duration ones.

Correct.

And sir, that's because of the selling of the process, which is why we were able to book the other income, the treasury income this quarter. Is that right?

Correct. Correct. Absolutely.

Yes. Correct.

And sir, what would be the interest reversal impact this quarter?

Sorry, what's the question, sorry?

The interest reversal impact on the -- this quarter.

Interest reversal? You're talking about NPA interest reversal, is that what you're saying?

Yes, sir. Interest on advances, how much was the reversal?

Yes, exactly, I got you. How much is the interest reversal? Chetan, I think you have the number, no?

INR 41 crores.

INR 41 crores. INR 41 crores, yes.

[Operator Instructions] The next question is from the line of Rishikesh Oza from RoboCapital.

Sir, my first question is that in your noninterest income side, what constitutes this INR 110 crores of other income?

Just a second. [indiscernible] about INR 70 crores. I think we need the full breakup. Yes, other income. See, we had -- the one which is sizable, I'll just read out those which are sizable. One is income from sale of PSLC, that's about INR 80 crores, which has increased from INR 15 crores for March and which has increased from INR 34 crores for the June ended 2020. So that's one sizable contribution. And the other one, which is a sizable one is, of course, all the technology-related income have gone up. It's about INR 35 crores for the -- for this quarter compared to INR 33 crores for last year June. Similarly, all transaction-related income is INR 57 crores for this quarter as against INR 49 crores for previous quarter. And as far as other income is concerned, INR 110 crores, which includes INR 80 crores of PSLC compared to INR 57 crores for the last year's Q1. Overall, we are seeing traction in almost all the line items, if you ask me.

Okay, sir. And my second question, sir, if you could provide a credit cost guidance for FY '22 and FY '23?

FY '22, as I said earlier, it's about 2.5% to 2.7%, and I'm expecting the year to be as bad as last year. So overall, we are looking at about INR 2,500 crores of slippages for the year. '23, we don't want to double-dip now because we need to see the impact of second half and how COVID situation pans out. So...

Okay, sir. So in case of normalized credit cost, what is your normalized credit cost, sir?

No. Frankly, nobody knows what is normal now. Normal, if you ask me what is my wish list of credit losses, I want it to be in the range of not more than 1%. That's my wish.

[Operator Instructions] The next question is from the line of [ Umesh Shah ] from [ Hanuman Holdings ].

Yes. Yesterday, I also talked with your Investor Head, Mr. Chetan, in Bombay. Sir, what I see that slippage in this quarter is about provision of slippages of INR 497 crores. And the earlier quarter also, I did ask you and more than INR 412 crores or something. And as he has explained me the COVID and you also been -- we are saying about the COVID 2 impact and no one knows about going forward. So how much more provision do you foresee for the coming quarters as well now? And my second question is, sir, that we are already raising -- we had already taken earlier approval for -- am I audible now, sir?

Yes. Yes, you're audible. Yes, yes. Please continue your question. Yes.

Yes. Yes. And then we had earlier said that INR 750 crores of equity and INR 500 crores. Now we have revised it probably to INR 2,000 crores. So INR 500 crores debt portion is still continue for the coming quarters, maybe '22 as you had explained earlier. And this INR 2,000 crores, how -- and what are the rough planning for the future today, sir? That is my 2 questions, sir.

Right. Right. Now to answer your first question, what we are envisaging as a slippage to happen for this year. I'm expecting a subject of H2, which is an uncertain period for any of us as of now. Considering that, I'm expecting the year-end slippages to be close to what we experienced last year. So I'm putting a number of INR 2,500 crores for the year, which probably given the fact that H1 -- Q2 is going to be more or less reflective of what is happening now. I'm expecting this quarter, we had INR 879 crore, Q1, we had INR 879 crore, I'm expecting Q2 also in the range of INR 600 to INR 700 crore kind of thing. And if H2, if the COVID 3 doesn't happen and if things become better, we expect the balance out of the total INR 2,500 crores to happen within the balance 2 quarters. We also hope that if the COVID situation becomes better, the recoverability and collection efforts will also be heightened. Because right now, the mobility of the team is restricted and with the courts, et cetera, not functioning. And in fact, the Kerala almost during the first full quarter we are working only on alternate days, et cetera. So -- and you know that we have a very sizable presence in Kerala market. So given all that H2 -- H1 definitely is very badly impacted. So I'm expecting out of INR 2,500 crores, anywhere between INR 1,500 cores is what is expected in H1 and balance probably would happen in H2. But we believe that this is assuming that the present collection and recovery efforts will continue. If there's a possibility for it to be heightened, then hopefully, the slippages will be lower than that. So this is as far as provisioning is concerned. As far as capital raise is concerned, we continue to hold the same belief that we would want to raise the second tranche of INR 750 crores. After the INR 240 crores which raised in March. We would want to go ahead and raise INR 510 crores for capital for this quarter. And the reason why we have taken approval for INR 2,000 crores is basically to see if things pan out the way we are envisaging and if things become better in the coming year, maybe in the last quarter of this year or maybe in the first quarter of next year, if we see an opportunity for an additional raise of equity. Hopefully, by then, our strategy everything will also be fully in place and we would have seen the impact of COVID, et cetera. So with that, we believe that if there is a scope for us to raise further equity, we will probably try and do that. So right now, we have not fixed any time line for the balance amount. Right now, what we are thinking of doing is only the balance of INR 510 crores out of the INR 750 crores which we took approval earlier that we want to complete, preferably before Q2 end, it might slip into Q3. So that's the plan as of now. As far as bond is concerned, right now, we have -- though we have taken a resolution approval, but we will be closely monitoring, watching the interest rates, et cetera. And if required and if we believe that equity raising is not going to be the same -- I mean, if we see the opportunity for equity raise is going to be concern in any way, then probably we might look at using those options. Otherwise, our preference would be to raise equity.

And these bonds may be after the later part of '22, first quarter of the '23 or something?

Right now, we have not even thought of raising and therefore, when we will raise is definitely dependent on how things pan out.

Thank you very much, sir, for giving me an opportunity to interact one-to-one to you, and I thank Chetan also to help me also to talk to you. And sometimes we'll meet in Bombay, if possible when the COVID is over, and best of luck.

Thank you.

The next question is from the line of Bhavik Shah from B&K Securities.

Sir, just wanted to clarify the reductions during the quarter of INR 349 crores, they are mainly recovery and upgrades. Nothing has been written off, right?

No, no. Recovery and upgrades only. As I said, the INR 209 crores of restructuring which we did for 2 corporate cases, which were tagged as NPA for the Q4, now they've been upgraded as restructured. And also we have done cash recovery.

Okay. Okay. And sir, the corporate slippages this quarter around INR 168 crores. Sir, can you qualitatively just give as in some of the sectors, what are the tickets size? And do we anticipate these kind of slippages to come in the following quarters?

Frankly, very -- while I'll give you those details which you're asking for. But my own -- okay. Just first -- let me first answer your question. So we have seen it from different industries, basically, 1 is the realty, 1 is a hypermarket. The other 1 is into data management services. So these are the 3 big accounts. So -- and we -- so these are -- the 1 -- we have 1 in realty, 1 in hypermarket and 1 is data management services. So these are the 3 big accounts out of the -- rest of all are very small ones. Actually, there is no pattern, as I could see, there is no pattern in this. It does that -- it's cutting across various industries. And probably because of the continued COVID impact, the financials have been worsening and it has led to them becoming NPA now.

Okay. Okay. And sir...

Yes. But frankly, if you ask me the worry is more on the SME and retail because that's the one which has been very, very hugely impacted by the COVID situation.

Sir, based on your assessment, any ballpark expected restructuring from MSME from here on? So as in we already have like INR 1,900 crores of restructuring booked?

Yes. How much more will be restructured?

Yes, sir.

Yes. That we'll have to assess. Let me just see. Let me just check one thing, just a second. Yes, we are -- see there's anyway this COVID 2, which -- the provision which has been given is will hold till December of this year. So what we have done under 2 -- already what we restructured is about INR 71 crores as of -- I mean, as of this quarter end, the concluded quarter. We are expecting another INR 700 crores to be restructured in the September and December quarter. So by December, it will be over. So in all, about INR 800 crores is what we are envisaging to be restructured under COVID 2 framework, of which MSME is about INR 600 crores. Retail and others will be about INR 200 crores. And we've already done INR 70 crores, we'll be doing the balance in the next 2 quarters.

Okay. So this will be over and above your INR 2,500 crores slippages guidance for the full year?

Yes. Yes, that's slippages.

Okay. And sir, what will be the ECLGS disbursement? 1, 2, 3, 4?

what will be the -- sorry, what will be the?

The ECLGS disbursements, have you done any?

Yes. Yes, we have done. Just give me a minute, I'll just tell you. Yes, ECLGS 1, what we have done is for about 9,300 accounts amounting to INR 2,600 crores. And ECLGS 2, as of now we have done about INR 112 crores. And 3, which is -- ECLGS 3 is about additional 20% loans to accounts under travel, tourism, et cetera, that's about INR 7 crores. 4, we have not done anything. Hospitals to set up options and [indiscernible] that we have not done anything. So just to reiterate, ECLGS 1, which is basically for all business accounts up to INR 50 crores exposure. It's about INR 2,610 crores. ECLGS 2, which is for expects between INR 50 crores to INR 500 crores. That is about INR 112 crores. And the 3, which is for 20% loans to accounts falling under specific sectors, that's about INR 7 crores.

Okay. Okay. And sir, a little clarification, sir. So as on date, our outstanding total restructured book, including COVID is INR 19 billion. And over and above that, we are expecting INR 8 billion from the 2.0 [indiscernible]?

INR 8 billion includes INR 70 crores, which we've already shown for this quarter.

Okay, okay. And sir, considering, sir, LGD is approximately 40%, 50%, so where do we see our PCR going up. So as in by the end of the year? Considering we're also going to raise capital, as in do we envisage to buffer up the PCR because it's very low?

No, they -- let me put it this way. So PCR, if you are looking at the PCR, excluding write-off, which is currently at about 38%, which used to be 34% earlier by March quarter, which is now at 38%, so see, we -- what I would like to place is that we will also be incrementally adding our new book. So we, definitely this quarter, haven't factored too much of new book growth because of COVID 2 impact. But yes, with the business, which we start -- which will start sort of growing from this quarter onwards, we will definitely endeavor to work on improving the PCR. See, I'm not expecting it to dramatically go up. We'll probably -- including write-off, it will be in the range of 60% to 65% is what we've -- allows us to keep during this -- various quarters of this year. And excluding write-off, we would prefer to be in the range of 40%. As and when things become better and market starts showing signs of revival, et cetera, I'm sure our advances book will start growing. And given the fact that we have a spread due to our efficiency in reduction of -- in sourcing liabilities, et cetera, we believe that we will have more funds to set aside for PCR. So right now, what we are envisaging is if we can retain at about 40% level, I think that's a reasonable estimate which I can give.

Okay. Okay. And sir, sir, any slippage were seeing from the gold loan book? I understand there was a change in LTV direction so much and...

We were cautious all through. So though we have grown our portfolio by 15% in gold, our NPA levels are very, very low. It's about 0.3% is the -- and there again, I don't think we'll lose any money. I mean -- but for some very small amount of rods, which happened in the earlier years, we really don't foresee a problem. There has been, of course, some -- this 0.3% has all happened due to delays in auctioning because of COVID restrictions, et cetera. So we believe that we'll be able to recover from there. But very negligible -- the NPA levels are very, very low for us.

Okay. Okay. And sir, I understand the credit call guidance is 2.5%, 2.7%. So on absolute value, as in how much would it be?

I said INR 2,500 crores.

So that is slippages, right?

Slippages, yes.

What about provision for the year?

Provisions for the year?

Yes.

No, it will be in tune with the NPA provisioning impact and whatever -- whenever we see our yield going up and our NIM going up, we'll be able to provide more than what is -- than we actually required.

And sir, our loan book is around INR 58,000 crores, INR 60,000 crores and 2.5%, 2.10%, so does it work out to like INR 1,600 crores across provision for the full year?

You are -- just hold on for a minute. Let me just take out the sheet and -- yes, we are looking at provisioning of about INR 1,600 crores. That's exactly what I think you also said, right?

Yes.

It was INR 1,550 crores. That's what we have to check.

And sir, last 2 questions, sir. Sir, the movement of SME book would be very helpful as in 0, 1 and 2 over March and this quarter. And sir, any ballpark guidance on profitability ratios as in do we expect a loss this year, FY '22? And how would we pan out FY '22?

We don't want to guess on how it will pan out because clearly, it's very uncertain as I'm talking to you. So we will take it as it comes. And we will -- whatever is required to be done, we will do that. Therefore, I don't want to double guess about loss or profit, et cetera. But whatever is -- whatever we need to handle, we will handle it and do the right thing. So -- because today, as we are talking, we are only seeing the negatives of the COVID 2 impact, what we are not still seeing is the positives of economy reviving, which we hope that it will become better in the H2, second half of this year. So with that, I'm sure the recovery from even SME book, et cetera, will be definitely much more than what we were seeing as the slippages in the past between the various buckets also. So I don't want to really guess how it will pan out. But I can tell the numbers as we have right now, that we -- that I can share it with you.

[Operator Instructions] The next question is from the line of Bajrang Bafna from Sunidhi Securities & Finance.

Yes, Sir, one thing, every last couple of quarters post you have joined, the strategy seems to be that whatever profit that probably we are earning, we are trying to provide it and using it in the provisions. So -- and that is precisely, we are not able to show the kind of ROE expansion that probably is required. I can understand that the NPA situation is not in our favor at this point of time. But going with the lower PCR, even for next 1 or 2 years, the situation is going to about to change if you don't beef up the PCR. So why don't take the pain at one go and probably beef up the PCR?

Sorry, we missed you, and in between we were offline. Sorry, can you repeat your question?

Yes. So sir, I'm just trying to say that whatever profit that we are generating post you have joined, probably everything is going for the provision. And despite that, the PCR is not inching up. So the dilemma of this high provisions will continue at least for this year and maybe for next year also. So -- which will not give any hope that the ROEs are going to expand and the business is going to expand normally. So we have seen in larger private banks, the burden has been taken in 1 of the quarter and the PCRs have been beefed up. And then going ahead, there is a crystal clarity that the provisions are going to be lower and the ROEs will be on the natural side. So I know this is a chicken-and-egg situation. But at some point of time, we have to bite the bullet and at least provide some sort of clarity that going ahead, the provisions are going to be pretty much in that range, which is your wish list of 1%. So -- but till that we don't bite the bullet, we have already diluted at 25% of our book value. So what is the use of keeping that INR 30 book value and if you are diluting it INR 8, maybe, INR 10 or maybe INR 12 or INR 13. So in our parlance, it doesn't give any importance and impact, unless and otherwise we have bite the bullet. And there is a precedence in the history that once you have taken the PCR on the higher side, then only the valuation improves. So my only suggestion would be that probably we should bite the bullet and show from amount of losses in maybe one of the quarter and beef up the PCR. And with the funds coming in, that is a humble request that once we have the clarity of future that the provisions are going to be low, then only it will be appreciated in terms of higher valuation for us. So that's the only, I would say, the request from our side. And if you could provide some clarity on that, will be really helpful.

Okay, clearly.

[Operator Instructions] The next question is from the line of Mr. Sohail Halai from Antique Stockbroking.

Am I audible?

Yes, sir, you are.

Yes. Sir, are you there?

I think you missed the management line.

The management line is connected. [Technical Difficulty] Participants, stay connected while we rejoin the line for the management back to the call. Thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.

No. I think the last question, I couldn't answer. I mean I -- when I started the answer, it went offline. The person who was asking about biting the bullet, et cetera. So I wanted to answer that.

Sohail sir, sorry to interrupt you. Sir, you may going to answer that question, and then we'll take Mr. Sohail's question.

Yes. Yes, please. So I wanted to, again, continue -- sorry, it got offline. So what I wanted to answer to the gentleman's question is that we are not doing things which is going to get -- give any miracle in the next 1 year because we should remember that the bank had a certain quality of book and the bank had a certain business model. And we need to -- when I took charge, we needed to take a call on how do we want to transform this bank into creating a structure which is going to help the banking sourcing good quality proposals and profitably price the transaction so that we get -- we sit on a trajectory of growth in the coming years. That is going to take time and one needs to have patience for that because no transformation is going to happen in a few quarters. It's going to take at least 3 to 4 years, if not earlier, okay? The point is, therefore, what we have done till now is over the last 6 to 9 months, we have completely transformed the way our liability structure is put in place and our asset structure is now put in place. Now with the -- while we were doing all this, obviously, the market also has gone through a huge, unprecedented situation of COVID impacting. It's definitely a once-in-hundred-year kind of situation, where the business models of SMEs and retail have gone through completely RE, and many of the retailers -- retail consumers have lost their jobs or their salaries have been cut off, et cetera. Many of the SME business models have gone into a loss with almost 70%, 80% of the small businesses are incurring loss today. So given the situation, I think we need to -- in order to ensure that the bank's fundamentals are kept intact, we need to ensure that quality credit is what will happen. And therefore, as and when we are able to improve our overall income either through regular income, which advance is growing or through the treasury or other income, we are looking for opportunities to set aside as much as possible towards provisioning so that the provision coverage ratio improves. That's the reason why we have also showed even this quarter, we have shown an improvement from whatever we were. I'm not saying it's anywhere near healthy. I'm only saying that it's a journey which has to be undertaken, and it will happen over a period of time. Whether market is recognizing this, whether market is appreciating this, I only -- I can only talk about the period when I took charge. I feel the market is clearly recognizing that. And we are quite happy about it. And the way we are going about this to completely look for opportunities to do business in a healthy way so that we don't incrementally add any poor quality assets or we don't want to incur any additional NPAs, et cetera. That's the reason why we have completely restructured our credit processes. We have created products which are safe, we have created processes which are proper. We have also been hit in the past with the fraud losses, et cetera. So we have put a proper checks and balances to ensure that the bank doesn't lose. And we've also -- we, I mean, granulate our exposures, so that we don't hit with lumpy exposures. So these are the measures taken to ensure that incremental book, which gets added to the advances portfolio, we took certain quality expectations. Only with that, we can endeavor to get income over a sustained and long period of time. If we go for anything which is short term, it's not going to hurt the bank. But in the short term, definitely, we need to manage these NPA percentages and situations of PCR, et cetera. That is exactly what we are carefully doing as you might have heard me talking every quarter about how we are maneuvering this. So therefore, in my mind, I think I have -- in my mind, I am doing all the structural changes, which in my opinion, is actually biting the bullet. If I have more -- obviously, the economy, the situation improves, if we make more money, definitely, we will be wanting to improve our PCR, et cetera, because that is exactly what is in my mind too. And I know that, that is the one which is a ratio which is closely looked by all of you analysts. So I'm quite approved on that. We will definitely endeavor to do that as we see traction happening in our overall income in the bank.

Sohail Halai, you may go ahead with your question.

Sir, just wanted to understand a little bit more on the SME side. So around INR 20,000 crores of exposure. There has been a significant amount of assistance given by the government as well in terms of ECGLS 1, then probably in terms of opening up the restructuring window. In terms of -- if you could just spell out that probably the NPLs (sic) [ NPAs ] that we are looking at right now and even in terms of the restructuring, is there an overlap between ECGLS 1 and basically the stress that is flowing?

No. Actually, ECLGs 1, if you look at it, the repayment has just started. If you remember, we had -- it was a 1-year moratorium. So that repayment just started. And in fact, as per COVID 2, we are allowed to even extend 1 more year as moratorium -- I mean as a period for repayment. So therefore, it has no -- I mean it's a very insignificant impact of ECLGS on the slippages. But what we are certainly seeing is that whenever, on a broader note, wherever we have done restructuring -- in the past, we have seen slippages happening from restructuring into NPA. We generally feel that it's anywhere between 25% to 30% of the restructured book become NPA. We have seen this number is coming out of the fact that this bank had done restructuring even for flat -- for 2 consecutive years, and then there was MSME restructuring which has allowed -- under this COVID 1 and COVID 2 restructuring, .So that was COVID 1 and COVID 2 restructuring they're all getting done now. Therefore, the slippages are clearly not something which has not happened, therefore, we cannot really comment about them. But one thing which I just want to mention is that whenever we have done restructuring now, especially in the COVID -- second phase of COVID 1 and COVID 2 restructuring, we are looking at restructuring only those cases where we see there is a possibility of cash flows continuing and there is a possibility of the company reviving. Wherever we feel that there is no possibility of the company reviving because the business model has taken a huge impact, we are going ahead and declaring them as NPA, and we are taking the relevant requisite processing needed for that. So that's a -- that's the approach we have had. So in nutshell, we would say that 25%, 30% is what we are seeing as slippages generally, which had happened in the past from restructuring to NPA.

But if I actually look at basically in terms of the ECGLS 1 that we have given probably around INR 2,000 crores odd, that would cover a INR 10,000 crores book, where you are saying that still now the payment has not started hence, basically, the stress is low. So whatever the stress we are looking at is from the rest of the INR 10,000 crores, which actually is a very, very significant number. So any qualitative comment on the behavior of the ECGLS 1 book in terms of whenever you are interacting with the consumers, whether there is a scope of revival? Or how will that pan out probably next financial year?

See, how they will be behaving is purely dependent on how the market is going to revive, right? Because the SMEs have been impacted by the COVID because their business models have gone through the roof and their supplies have been cut and many of the traders, et cetera, they were not able to move around in the market, et cetera, et cetera. So when ECLGS 1 was given, clearly, nobody knew exactly how things will pan out. Even as I'm talking to you, I don't know any of us would know how it will pan out in the second half of this year. So therefore, we -- clearly, I can't give you a guidance on how they will behave. What I can tell you is what we have done and what was the assumption made when we did this. The assumption which we made when we did this was that if there is -- if we see -- we saw an opportunity for the cash flows, et cetera, to revive when the situation becomes normal. Yes, we would -- we had done restructuring on them. So how they will indeed affect going forward will be dependent on how the market is going to come back in the next few quarters. So we will definitely share with you as and when it happens. So please rest assured.

Okay. And sir, just in terms of basically the loss given default that you mentioned, so in terms of you actually indicated that recently, whenever you're actually selling of asset or something like that, you are looking at a normalized 40%, 45% kind of a recovery rate from that. Is that fair in terms of SME? This is what's pertaining to SME, right?

No, we are -- I -- number which I gave you is a mix of wherever we have done -- see, again, this is a very, very unique situation. I think all of you should appreciate that secondary sales of properties are not happening. Very, very few deals are happening. So it's -- definitely, it's unfair to keep projecting that number to the -- for the entire portfolio because wherever we do SME deals, we definitely take a good amount of collateral. Most of the cases, we get 80%, 100% collateral. And these collaterals also, we take a mix of residential, commercial, land and all kinds of -- even industrial property, et cetera. So frankly, there is no pattern to it. In some cases, we have recovered more, some cases we have recorded less, depending on how that particular geography is opened up for secondary sale. Some of the states have had their situation much better than a few other states. Some states have not -- have been under severe lockdown, where secondary sales were not happening. And you should also know that many of the courts which were giving resolution, et cetera, many of the ports are not functioning also in almost all full last year. And COVID 2 has only made it worse in the first quarter of this year. So I think it's too speculative to talk about what will be the likely trend on LGD going forward. But what I can tell you is that we have got a good collateral covering all our advances because that's how we do business in SMEs.

But at least as of now, you have not seen the collateral value deteriorating. There are -- sales are difficult to happen?

No. That -- obviously, wherever we need a periodic valuation and our provisioning also is done accordingly, and auditors have -- clearly are verifying and even regular inspection of our own internal audit as well as the regulators audit. All that ensures that we -- wherever we see deterioration, we assess the deterioration and we provide accordingly.

Okay. Okay. And sir, secondly, in terms of -- basically, you could just speak about in terms of SME. Is this basically a geography-specific where the lockdown would have been more severe and some of the other parts where you have the SME where the lockdowns have been lifted, are performing better? Just to understand whether a little...

No. There is not much of a big pattern. In SME, when I look at the industry to which they belong to, it is cutting across all industries, and it is cutting across all geographies. Of course, geographically, if you look at my advances' book, geographically, we are predominantly present in south. To that extent, it is spread between south being predominant and north being a little lesser than that. But in terms of -- I mean in terms of impact of it, I think it's across industries and across the country.

So sir, I was just trying to understand because south has seen a more severe lockdown. So probably, as the lockdown gets lifted, do you see the signs of recovery as well, probably that...

Definitely, we'll see signs of recovery because our ability to collect -- our ability to recover, definitely will get better if the lockdown situation becomes better. So just to give you some flavor of this, we have had -- in all, we have had about INR 420 crores in the SME, which became a fresh slippage for the year. And if you look at the kind of industries where we have had this: trade, professional services, textile, construction, engineering, basic metal, tourism, food processing. All of them are there. And trade, of course, since our portfolio composition has got a lot of traders as a proportion of -- even in slippages, the traders are a little more compared to others, but it's cut across industries. And this pattern is very similar even in the corporate slippages. Corporate slippages, if you look at it even in the NPA book, which we -- when we see, we find infrastructure, food processing, commercial real estate, textile, engineering, agriculture, financial services, gems and jewelry. So it's cutting across industry. See the good and bad of COVID is that it's like uniform everybody. It is impacting everybody. But depending on the segment to which they belong to, the severity of the impact is very high for retail and SMEs.

Just one last question on the SME side. If -- suppose there is a slippage of X amount right now, are those customers still paying the EMIs, so they would have missed the EMI and slipped into SMA. Are those customers coming back and paying the EMIs or still now there is time to wait?

Yes, yes. No, we are seeing a pullback from NPA into SMAs also -- SMA-2 also. As we see at any point in time, we are finding that people are -- as and -- one good thing is that as and when the situation becomes better, the customers are also today given the situation that travel, et cetera, is so restricted, they are indeed coming and paying whatever is due, et cetera, because they are also concerned about the bureau record, et cetera. So you know that CMR and spread credit score, et cetera, is now so very well known to everybody that everybody looks at this for onboarding customers. So definitely bureaus have helped the entire lenders to sensitize the customers about the potential impact on them if their credit behavior worsen. So we are seeing that also happening.

So any percentages that you can give that once it has turned NPA, they are still paying off the customers? Any ballpark number?

No, we have not calculated that as a percentage, but we -- I do weekly review my collection in NPA. And I can tell you that it's a fairly common thing to happen of NPA coming back into SMA and SMA-2 also slipping into NPA. See we have this weekly estimation of how much is likely to be in various SMA books and how much is likely to be recovered. That I track weekly, and I can tell you that there is a huge movement happening from both sides.

The next question is from the line of Mahesh M.B. from Kotak Securities.

Sir, just 1 or 2 questions here. One, if you look at the slippages that has been cost in your book, have you been able to do any form of vintage analysis as to whether it was a selection issue, probably borrowers came in quite recently in your books because the bank has been trying to make some changes away from corporate in recent years. If you could just comment on it?

See, when we look at the vintage of the accounts which are slipping, it's -- the fact that we are now seeing slippages happening in SME and retail, which is anyway -- retail has been a phenomenon in the bank from 2015 onwards, when the bank actually started focusing on retail. So retail book -- entire book of retail got built up in the recent years of last 5 years. So as much SME is concerned, anyway, that has been the stronghold of the bank of [indiscernible].

In the sense, were these accounts originated in recent is, even in the [indiscernible] loan side? They may have a...

Not recently. These are all gold -- I mean these are all books, which were done in the last several years. We are not seeing -- in fact, I took another statistics, whether any NPAs happened since October of last year, hardly anything.

And second question, sir...

That, of course, it's too early for us to say with any certainty because as you know, it's about 9 months since October, and also this is a period when COVID was actually in full swing. So either ways, I'm saying the number of deals which would have got booked also is relatively smaller. And therefore, we were also -- we had also an advantage of looking at only those who are experiencing COVID when we were onboarding. Therefore, to that extent, obviously, extra cautions, extra -- where we've taken. But if you look at people who are onboarded even 2, 3 years back, it's not a normal year for them because they've had a flat situation for -- hitting them for 2 consecutive years. So Kerala, that way has not had a normal year for some years now.

Second question, sir. And these SME borrowers do they have over -- do they have multiple banking relationships that you are seeing in the slippages book?

Yes. The SMEs, of course, do have, but considering that our average ticket size is anywhere from INR 50 lakhs to INR 60 lakhs, many of our customers are sole banking because they are all quite -- I mean they are all typically companies where the average lending will be, let's say, not more than INR 1 crore or something like that. But we do have, of course, maybe 20%, 30% of the book will be with the multiple or consortium banking. Because larger SME proportion is quite low for us. But as a new strategy, we will definitely be focusing on both the segments. We'll be focusing on segments up to INR 100 crores of turnover where the average ticket size will be INR 1 crores, and we'll be focusing on SMEs with INR 100 crores to INR 250 crores turnover, where the average ticket size would be INR 8 crores to INR 9 crores.

Okay. And this CMR 1 to 10 the rating scale that is formally used by all banks, have you seen extremely sharp deterioration amongst the rating scales in recent quarters, which explains the COVID phenomenon and what?

So what we are seeing as a trend is that wherever the faster deterioration happens, -- like if somebody has been a CMR, let's say, for example, CMR 3 when you onboarded them. And let's say, when you query them, let's say, maybe 3 or 4 months down the line. And if you are finding them having slipped into CMR 4 or 5, you find that they have the tendency to move into NPA faster. Because CMR definitely takes into account also the utilization, the -- how much of the churning is happening, how are they credit hungry? Are there inquiries in their name? Are there receivables stretched? So there are many things which gets factored I think, in CIBIL's CMR score. And what we are onboarding, we would prefer to onboard anybody with CMR 1 to 3, but then -- We do find that people with even CMR 4 or 5, they have a decent behavior. Generally, it is believed that CMR 6 to 10 has higher potential for turning into NPA. But we've got vintage customers who are appearing a CMR 8, 9, but then they've been doing quite well for years where they have never had a default also. So it's -- I won't say it's reached a stage of where we can see -- say with 100% certainty that CMR is indeed, we have a very, very, very good representation of the quality of the portfolio. But reasonably, it mimics the quality of the book.

The next question is from the line of Sushil from Indus Equity.

Sir, just going through the presentation. Basically, we are doing between gold loan and personal loan around INR 24,000 crores. And our corporate book is at INR 12,000 crores. And I think our clear direction is that our personal loans and gold loan would increase and corporate loans maybe static or degrow despite our growth in the balance sheet size. So can you give me some outlook on how this personal loan and gold loan margins are there? And what kind of growth can we estimate over a period of 1 or 2 years in the bank?

Yes, yes. Sure, sir. So as far as corporate is concerned, while the -- we went in for a granularization of corporate book, which is where we brought it down from some 44% of their contribution to total advances to close to 24%, 25%. Right now, as I'm talking to, corporate is about INR 14,000 crores in my total book size of INR 58,000 crores. But now what we are doing in corporate is we are churning the portfolio with better-rated corporates. And wherever we are seeing the corporate -- see, actually what is happening in the COVID situation is many of the corporates are also flushed with funds. So they comment -- the payback, the loan which they have taken and they also start using much lesser working capital. Their CC and WC, et cetera, they have started paying back so that the utilization is much less. So it's -- that is actually bringing down the corporate book. But we are finding that the onboard -- we are guiding a lot more new corporates also into our book. New meaning, existing customers who are coming in for fresh facility, et cetera. And where we are very consciously adding them and they are better-rated corporates with INR 100 crores -- I mean, with A rating and above, wherever they are in need of INR 25 crores to INR 50 crores, et cetera, we are continuing to fund them. So -- as far as corporate is concerned, it will be -- like it will be a lot of churning happening, but we will not degrow so much more from the current levels, maybe INR 14,000 crores, I would probably say it will be anywhere INR 12,000 crore to INR 14,000 crores, INR 15,000 crores is what we will be seeing the corporate book. As far as the strategy for growing the overall advances book, we will definitely be focusing on personal segment, and the business segment. Business segment right now, we are cautious because of the COVID impact. But as far as personal segment is concerned, in some of the personal segment products like personal loan, et cetera, we were almost nonexistent earlier. We'll definitely be focusing to grow there because there, we can actually leverage our existing 6 million customer base to come out with pre-washed good leads for giving them personal loans. We have already done 2, 3 rounds of preapproved personal loan offer where we are seeing that customers are indeed coming and taking. And these are all prewashed customers with good quality with -- a good credit history. So that -- and as you know that personal loans are generally offered at a rate of 10%, 11% plus, and we are -- some of the preapproved offers, we were able to even get a 12%, 13% kind of rates and with 1% or 0.5% fee over and above that. But that portfolio is too small as I'm talking to you. When we do more and more of that, we'll also be sourcing new-to-bank customers, et cetera. With that and with the kind of rates which will be prevailing for a personal loan, we expect the margins to become better in personal loan segment. As far as home loan is concerned, you know that there are prime home loan customers are expecting -- getting much better rates from the competition today. Large banks offer rates at 6.5%, 6.25%, et cetera, for a home loan customer. Clearly, that segment is something which we cannot afford. So we are looking at customers who are availing home loan, whose credit history is also checked and who are good credit worthy, we are able to get rates anywhere between 8%, 8.5% kind of a thing. And we are looking at not a very large -- very prime segment. We are looking at a average ticket size of INR 30 lakhs, INR 40 lakhs kind of people who are seeking home loan. And particularly in southern states, if you look at it, many of these borrowers also got for a stand-alone, independent house construction, where the land also has given us a collateral and on that, they will be seeking loan for building their homes. Unlike Bombay, Delhi and other, Pune, et cetera, where a lot of flat purchases happen. Here, it's more of individual homes, which gets built. So there naturally, they cover -- collateral cover, et cetera is also far, far higher. There, we are able to -- those are the kind of leads which we are getting and we are closing now. So the way I look -- going forward, what I'll look at is -- the focus areas will be definitely retail. In retail, we'll be definitely continue to grow vehicle loans where we have had much lesser delinquency traditionally. Personal loan, which is anyway much, much smaller book as of now, we will be growing that. Home loan and mortgages definitely will give a lot of stability to the overall asset book. So as the tenure of these loans are generally 10 years and 15 years. Though the rate will be 8%, 8.5%, but then it will be giving a sustainable income over a period of time. As far as retail segment is concerned, we'll be looking at how COVID situation pans out. And then our appetite once the situation becomes better, we'll be sourcing more and more of the SME customers.

Your growth area segment which you described very well, basically, we are competing with NBFC or private banks. So we may be in a sweet spot between both, mainly against the NBFCs, which do affordable housing or self-constructed houses, so the gold loan concerned or some of these segments. Now to stay in composition, what are we doing in kind of measures in digitization, turnaround time? Are we -- to withstand the competition, are we -- does our cost of funds go down that we can support margins by increasing our market share in this segment?

Yes. Very good question. Actually, to answer, both we have done, and we will be continuing to do. One is, first, let me talk about the turnaround time and digitalization. Digital, actually, we -- as I said earlier in one of my earlier con calls also that we have actually gone in for a retail platform now, which will be commissioned, hopefully by September end in which we can onboard all the retail loans and where it has got a digital capability also. And the technology for the bank is a strong area. And more than 90% of our transactions also happen through digital. And we are using technology in very many areas. We are using chat bots. We are using credit models for underwriting. So with the platform coming in, we'll be able to incorporate the credit models developed for retail. And as well as SME also, we have hired a reputed world-class agency to do -- and that, obviously, will be onboarded into an SME platform, which will help us to digitally onboard customers and digitally process. So turnout in time is definitely an important criteria, and we have also streamlined our products and processes to ensure that our turnaround time matches with any good bank in the system. So in that respect, any good customers, irrespective of where they belong to, we can give a run for money for large banks. As far as the PL is concerned, anyway, we are not only digitalization, even disbursement, et cetera, we are -- we have got the capability to do online disbursement and even documentation can be done digitally. All the capabilities we have. So we will definitely leveraging our technology capabilities to do a lot more digital. But this will definitely get accelerated when the platform becomes ready. And when the scorecards, which are developed by our consultants, will also be operational. We have hired Experian to develop our credit models, which is almost ready now, and we also use an external international consultant for developing our MSME credit model. So this will ensure the credit quality is of a good quality. And as far as the margin to compete with large banks, et cetera is concerned, you must have seen that our liability franchise has done exceedingly well. Our CASA has grown. Our deposit base is growing. Our cost of funds is continuously coming down. Despite the market rates being low as we see, our overall income level is comparable despite there is a degrowth in our total assets book. That only goes to prove that our margins are a bit more and more high-yield products, which will be growing like a PL or vehicle loan or gold loan, et cetera. We expect the income levels to go up as we see -- as we go forward. And so this is -- so we are actually not really considering ourselves to be competing with NBFC or to -- we are that way, -- in fact, just to share with you an example, recently, we bid for a very large bill discounting facility in competition with all the large banks, and we were able to bag the contract also. Because our ability to price is definitely there. Because our cost of funds is comparable to any other large banks custom funds. And we are seeing good traction happening in our NRI franchise. We are seeing good traction happening in CASA. And as more and more new-to-bank customers come in, our traction on CASA will continue to only grow. And we are pretty hopeful that with that, our ability to price will be definitely better, our ability to source good quality customers would be better. With a good streamlining of process, et cetera, our turnaround time also will be comparable to any of the banks in the country.

[Operator Instructions] The next question is from the line of [ Sri Shankar ] from InCred Capital.

I got a simple question. See, you mentioned that the slippages has been across the sector. And you specifically mentioned realty, hypermarket, data management services. All these are from Kerala or its spread across pan India?

No. All these are from different, different places.

Different, different places. Not necessarily from Kerala alone, correct?

In fact, all the 3 which we talked about, none of them are from Kerala. Yes, maybe one. One of them is from Kerala. That hypermarket is from Kerala. Other...

Okay. I think we lost them.

Hello, sir, can you hear us.

I can hear you, but I can't hear the management. [Technical Difficulty]

Participants, please stay connected while we rejoin the management back to the call. Ladies and gentlemen, thank you for your patience, we have the line for the management reconnected. Sir, you may go ahead.

Yes. That was my question. That's it.

Ladies and gentlemen, that was the last question for today. I will now hand the conference over to the management for closing comments.

Thank you so much, and I...

Mr. Murali, sorry, we are unable to hear you.

Can you hear me? [Technical Difficulty]

Yes, now we can hear you. Hello, Mr. Murali can you hear us? Participants, please stay connected. Thank you for your patience, everyone. So we have the line for the management connected. Sir, you may go ahead with your closing comments.

No, I sorry for this. Again, we went offline. I wish to thank all the participants, all the analysts who participated in this call and all the people who took their time out and to seek clarification. I thank each one of you. And I wish to reiterate that we will continue to share with you the development as and when it happens and the kind of initiatives which me and my management team take -- are taking to steer the bank in the right direction. And I once again assure you that we'll give as detailed explanation, as detailed answers as possible for giving clarification to any of your queries. And we continue to seek your support. And I once again thank all of you. And please take care of your health. It's -- because we are going through tough times now. So thanks so much. Bye.

Thank you very much. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.